Tuesday, April 1, 2014


The agenda item is just one sentence. Two if you count the "First reading" as a sentence. This was on the March 11th Town Council of Smyrna meeting and for a one sentence item, it sure is costly.

e. Consideration of an ordinance to amend Ordinance No. 13-10, adopting the 2013-2014 Fiscal Year Budget relative to mixed drink tax debt and in lieu of tax revenue. First Reading. 

It all goes back when Smyrna started to allow mixed drinks and the mixed drink tax came into play. Money!!! Yes a good chunk of pocket change went to the state coffers, and some was even returned to the local community.

But that is where it stopped flowing, and it shouldn't have.

The tax law that you and I have to follow to the letter, also needs to be followed to the letter by the local community. Smyrna it seems was a bit late in moving the money as it should have been moved. After the state took their 50%, the other 50% was to go to the communities educational system if it had one....if it didn't, than it could keep half of it, and send the rest to the county school system.

The whole part about the "if it didn't" phrase slipped through the cracks...for almost a decade. Why it took this long looks bad, why the school system never asked where their cut was also looks bad, so there is a lot of badness here.

In 2011 this error was noticed and the town government started to pay regularly, but they had to figure out what was owed. Now Smyrna is not the sole town with this problem. 
Cities across Tennessee need to start paying school districts millions of dollars in unpaid mixed-drink taxes, the state attorney general says. 
Chattanooga school officials say the opinion released this week by Attorney General Robert Cooper means local officials must pay the $11 million-plus that is owed to Hamilton County Schools and can’t negotiate a lesser settlement or use land to offset the debt. 
“It’s wonderful news. It’s the best news since Santa Claus,” said school board member David Testerman. “Our school system is in desperate need of funds.”
11 million. OUCH!

Now it has been two years since this issue was noticed, and I'm not sure why it took this long to get around to fixing it, maybe the opinion from the state attorney general was the deciding factor, but Smyrna had a first reading to pay it off in one lump sum.

A humble $548,000 and the issue will be solved. A solid half million. 


This in connection with the tax increase of last year would make anyone unhappy. Luckily the town was getting a large sum for the construction of the Nissan Battery plant, and they are redirecting it to cover the cost of this decade long error.

Here is something to think about. If you and I were a decade or so late on taxes, even if we paid it, I would feel a fine occurring in my future. Thank goodness the town was not paying a tax, but supposedly moving it from one account to another. This means only that what is owed, in a painful lump sum, is the money we received slowly over time. There is no extra payments or fines, so Smyrna breaks even. 

The other item to know is that the school system will be spending that money on renovations to the Smyrna Primary School, so it will stay local. It is good for the town government to be able to say that no extra funds were touched, the money will stay local, and that they will be staying current now that this issue is known about.

One thing to note. In a letter from Mayor Mary Esther Reed, she stated that...

The auditors that service numerous city's throughout Tennessee discovered a provision related to a tax on liquor by the drink that several municipalities were unaware of.
The auditors had not discovered this tax provision until last year and in order to remedy any shortage of amounts owed to the school system

If these are the same auditors that checked up on us for the 2002-2011 period, I would ask why this was not noticed before a decade passed. That is a very good question.

$548,000 seems like a lot, and it is, and this could have ended much worse than it did, but it ended on an even note. That we can all be thankful for.

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